Sign of the Times: High premiums for employer plans drive 24M to the Marketplace, but will subsidies stay?

Chase Marable: Workers seeking more affordable insurance are flocking to the Marketplace.

Jeff Kennedy: Subsidies are key to Marketplace insurance being a viable option.

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Under the weight of rising health care costs, an increasing number of people are surging to the Health Insurance Marketplace rather than opting for employer-sponsored plans.

During 2025 open enrollment, approximately 24.2 million individuals selected a Marketplace plan, 3.9 million of whom were new and 20 million of whom were returning – more than doubling numbers from just four years ago. Missouri ranked No. 16 in enrollees at 417,000, according to the Centers for Medicare & Medicaid Services. Missourians’ enrollment has grown by 106% from 2020 to 2025, according to Kaiser Family Foundation data.

It’s a sign of the times.

“They’re seeing this higher increase on either more money coming out of their paychecks every time they’re paid or they’re seeing a higher cost to utilize their health insurance from their employer,” said Chase Marable, managing director of Higginbotham Insurance Agency Inc. “I don’t think that a lot of employers are intentionally driving their employees to the Marketplace. I think it’s just happening naturally from these subsidies and from what’s going on.”

Subsidies are the key here, agree multiple local experts, including Marable. In 2024, approximately 93% of enrollees utilized tax credits. Through the Inflation Reduction Act of 2022, tax credits to purchase Marketplace insurance increased coverage affordability for those making up to 400% of poverty levels. It additionally lowered income qualification guidelines for who could access Medicaid, ushering in a new wave of enrollees in the aftermath of COVID-19.  Without these subsidies, Kaiser Family Foundation data identified that annual premium payments could be 79% higher for those individuals.

“Without subsidies, the Marketplace is not a competitive option whatsoever. What employees are seeing or what members are seeing on the Marketplace are kind of false rates,” said Jeff Kennedy, employee benefits adviser at Nixon & Lindstrom Insurance Inc. “The real premiums behind those plans are much higher than what the member sees.”

The subsidies are up for renewal by Congress at the end of the year, however, and it’s uncertain if partisan politics and cuts by the Trump administration will result in the credits disappearing.

In December, the Congressional Budget Office released a statement to Congress that 2.2 million people could lose coverage in 2026 without subsidies and 3.8 million additional people could become uninsured each year from 2026 to 2034. According to CMS, loss of subsidies could raise Marketplace premiums by more than 50%. Approximately 2.2 million customers could lose health insurance, according to a December news release from the American Hospital Association.

Ken A. Stephens is the managing partner of Employee Benefit Design LLC, with 40 years of experience in advising businesses and individuals on selecting health care plans. The loss of subsidies, he said, could be catastrophic and put pressure back onto employers who are also swimming in rising premium costs. If Marketplace plans become inaccessible for millions of earners, this could drive many of them back to employer-sponsored plans, Marable added. However, if those employees couldn’t afford employer insurance before, how will they be able to afford it now?

“If that goes away, there’s going to be more people dropping coverage,” Stephens said, “There’ll be more people going uninsured and there’ll be more pressure for the employer plan to be an option for these people.”

Stephens said while subsidies once seemed off-limits, times are changing. He projected only a 60% chance that Congress keeps them in place.

“I’m concerned in the current environment, where there seems to be a big emphasis on cutting government expenditures, that it could be on the chopping block. Having said that, the chaos that it would cause – a lot of people losing insurance coverage,” said Stephens.

Whatever happens with the Marketplace, employers are still facing a choice on how to construct their health insurance plans.

“We’re seeing such an increased demand and increased cost of care. And when we see that increased cost of care, that’s then going to be reflected in a higher claims cost, that’s going to be reflected in higher premiums because the carriers have to maintain their profitability,” Marable said, “and then that’s going to be impacted by companies and employers because they’re going to have to make those tough decisions when they’re getting a higher increase for the same benefits.”

While there is a degree of power in selecting benefits plans, a lot of the decision making is out of employers’ hands and depends on the rising cost of health care — which is expected to continue increasing. An April report from the American Hospital Association states that “82% of health care experts expect tariff-related expenses to raise hospital expenses by at least 15% over the next six months and 94% of health care administrators expect to delay equipment upgrades to manage financial strain.” 

“Regardless of what we do from a plan design standpoint, the rates are driven by the cost of delivering that care from year to year,” Kennedy said. “Health insurance carriers and employers are having to balance that. How do we fight this consistent increase in the cost of providing the service or this benefit to my employees? And on the carrier side, how do we continue to offer this service, this coverage at an affordable rate if the cost of that care is increasing steadily as well?”

Another big question of the moment: How can employers stay competitive in recruitment and retention? Health insurance is currency in hiring, with benefits packages becoming increasingly critical to whether a candidate becomes an employee. Marable said the No. 1 question his customers receive from prospective employees is about their benefits.

“There’s so many options for employers to be able to run a very cost-effective program that will allow them to pass those savings to their employees to then keep their employees on their benefits plan, which also has a huge aspect of retaining their great assets, their team,” he said. “It’s really about taking ownership of the plan, getting creative within the plan, looking at what can we do on network, what can we do on pharmacy and really trying to design the best benefit program for your employee that limits payroll deductions for premium and also limits their out-of-pocket costs when they do need that insurance.”

Kennedy said some small businesses are opting for reimbursement options such as an individual coverage health reimbursement arrangement, providing a set monthly “allowance” toward purchasing individual health plans. The Missouri Chamber of Commerce offers a multiple employer welfare arrangement plan, underwritten by Anthem, for small businesses with two to 50 employees to access group buying power.

Offering diverse plans is also important, Stephens noted. It’s not uncommon today to offer three or four options at varying coverage levels to meet employees’ diverse needs. Exploring options of direct primary care models, telehealth plans, preventive wellness and mental health access also go a long way in creating a robust, attractive plan that mitigates some cost.

“It’s trying to provide these plans that provide low barriers for people to seek treatment. It’s just getting harder and harder all the time,” Stephens said. “The sad part is it’s not going to get better. It just seems to be on a trajectory or a path to continue. So, with that, employers really have to look at their health plans and be innovative.”